Under the Securities Act 1933, all offers for selling securities need to meet certain qualifications or register with the United States Securities and Exchange Commission (SEC) for exemption from such registration. Regulation D is about the rules that provide exemptions from the registration necessities, permitting some companies in offering and selling their securities without the need to register the securities with the SEC.
A Regulation D offering is used for making access to the capital markets possible for small companies that may not otherwise afford the costs of a usual SEC registration. Reg D may also refer to an investment strategy, typically associated with hedge funds, based on similar regulation. (If you are planning complete a Regulation D offering, you require to file a copy of the current Form D online from the EDGAR database.)
On 10th July, 2013, the SEC issued new regulations that permit public solicitation and advertising of Regulation D offerings to accredited investors. Regulation D sets out the qualifications required to meet provisions for exemptions from registration requirements. Rule 501 of Reg D covers the general conditions that apply for exemptions under Regulation D, including Regulation d 506(c).
So far, so good. Now the practical side of Regulation D:
Regulation D private placement documentation must be conducted strictly according to regulatory standards.
As the issuer of securities, you are fully bound by all applicable laws including laws related to fraud and misrepresentation. Exempt or not, the securities are your responsibility.
It’s illegal to sell securities without the proper SEC license or exemption (Reg D). Your prospective investors won’t even bother to look at your proposal unless you’ve carried out the Regulation D process properly.
If you’d like more information, or need to talk to someone about your Regulation D capital raising compliance issues, there’s a company called Venture Associates, a private placement agency in Denver, which has a lot of useful, no-nonsense information on their website here at venturea.com. They spell everything out very clearly, so check it out. Fore more vsisit: http://www.venturea.com/pvt.htm
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